‘In 2010 Osborne’s first budget cut housing investment by 60%, undermining his own ambitions and the commitments Conservatives have made since.’
Photograph: Rui Vieira/PA

This budget Britain needs a decisive break with the past five years on housing. George Osborne likes to blame the Labour party but the Conservatives now have their own track record, and it is five years of failure on every front.

Home ownership is down sharply, with more than 300,000 fewer young homeowners, rough sleeping has doubled, private rents have soared, housing benefit spending has increased, and during the last parliament fewer new homes were built than under any peacetime government since the 1920s.

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It is hard to find another area of public policy that is failing so conspicuously and comprehensively. So the big challenge for this budget is to turn this around. The Conservatives’ failure on housing is in large part because of the chancellor’s failure on fiscal policy. Time and again, his bid for short-term political gain has trumped sound long-term policy and the national interest.

In 2010 Osborne’s first budget cut housing investment by 60%, undermining his own ambitions and the commitments Conservatives have made since. Ministers say they want to boost home ownership. But ownership has fallen steeply, and 27,000 fewer shared-ownership homes were built over the last five years than in the five years before that.

They say they want to protect services for the most vulnerable, but while homelessness has risen the National Audit Office has confirmed that funding for homelessness services has almost halved. They say they want to continue to provide affordable rented homes for those who need them ,but while council waiting lists have grown newbuild social rented homes have dropped to the lowest level for more than 25 years – and from next year the chancellor will stop funding them altogether for almost the first time in a 100 years.

They said they would build 200,000 new homes a year during this parliament, but they’ve managed just 124,000, in their best year since 2010.

Osborne has tightened his fiscal straitjacket still further, stifling sensible housing investment at a time when it has never been more needed or less costly. No wannabe first-time buyer would turn down a home because it meant taking out a mortgage, and no government should shrink from investing when it is good value for public money and will generate a return.

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In housing this means more jobs, more apprenticeships and stronger economic growth. It’s recognised by the OECD, the IMF and the government itself.

When I was Labour’s last housing minister, the established return on every £1m of public investment in house-building was 11 jobs. It also means lower public spending on housing benefit, which is rising as the cost of housing grows much faster than incomes.

In a report I published last year, I showed how a Labour government could build 100,000 council and housing association homes each year to rent and buy, and pay for them in housing benefit savings over 26 years.

Investment in housing isn’t just good social policy: it’s sound fiscal policy too. Labour’s fiscal rules would deal with the current deficit but also give a Labour government the scope to invest, and fix the cost of the housing crisis. As we did in 2008-10 – when Labour set out the biggest investment in housing for a generation – Labour in government would make housing the first priority for new investment.

George Osborne and his government have no long-term housing plan. Five years of Conservative failure on housing is set to stretch to 10 without a big change. And if the government won’t fix Britain’s housing crisisr it will fall to Labour to clear up the mess.